Markets regulator Sebi on Tuesday allowed Associations of Persons (AoP) to open demat accounts in their own name, enabling them to hold mutual fund units, corporate bonds, and government securities.
However, such demat accounts will not be used for holding equity shares. The new rule, applicable from June 2, aims to make it easier for AoPs to invest while ensuring regulatory compliance. This came after Sebi had received representations to permit opening of demat accounts directly in the name of AoP.
"Upon examination of the relevant legal provisions and after detailed deliberations with stakeholders, to foster and ensure ease of doing business, it has been decided to allow opening of demat account in the name of the AoP for holding securities, such as units of mutual funds, corporate bonds and government Securities in demat account,” Sebi said in a circular. It further said, ”demat account is not to be used for subscribing/holding equity shares”.
The AoP are required to follow the rules governing its constitution. Sebi said that PAN details of the AoP and its Principal Officer (such as a secretary or treasurer) needs to be provided.
The principal officer will be the legal representative in case of disputes. All members of the AoP are jointly responsible for the account. In a separate circular, Sebi has asked Industry Standards Forum (ISF) member associations and stock exchanges to publish industry standards with regards to LODR (Listing Obligations and Disclosure Requirements) Regulations on their websites.
The ISF, including ASSOCHAM, CII, and FICCI, has created industry standards in consultation with Sebi. These standards aim to simplify and improve how companies disclose material events. Listed companies must follow these standards to comply with rules.
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